Payments fraud is on the rise, and not even corporate giants are immune. In April 2017, a U.S. Justice Department investigation revealed that Facebook and Google were the victims of a $100 million payment scam by an Asian supplier. And two years ago, transactions fraud hit a record high of 78 percent, according to a survey of close to 700 treasury and finance professionals conducted by the Association for Financial Professionals (AFP), with email account compromise playing a outsized role.
Israeli startup NsKnox — the brainchild of Alon Cohen, the founder and former CEO of cybersecurity company CyberArk, and Nir Tenzer, formerly Microsoft’s chief operating officer of South Africa operations — aims to stop it in its tracks with an innovative cryptographic technology. Like its namesake, Fort Knox, NsKnox’s eponymous product creates a sort of shield to safeguard corporate cash by implementing a paradigm Tenzer and Cohen call cooperative cybersecurity (CCP), which effectively “shreds” data into bits of information and stores the shreds in multiple secured locations. As each of these stores contains only a random part of the data, any single one is effectively bound to the original information, making it impossible to tamper with without modifying all the shreds simultaneously.
To prove out the approach, Viola Ventures and Microsoft’s M12 co-led a $15 million series A funding round in NsKnox, which saw participation from Israel Discount Bank investment arm Discount Capital and previous seed investors. It’ll enable the startup to expand its global customer base and further develop its platform, Tenzer said, and to advance its go-to-market strategy.
“Businesses are so focused on protecting their data and the identity of their users that they are not doing enough to protect the very lifeblood of their organization — their money,” he added. “NsKnox is bringing corporate payment protection into the digital age, arming companies in the battle against payment fraud, manipulation and cybercrime. The backing of M12 and Viola Ventures is a tremendous vote of confidence in our ability to protect organizations worldwide and help them tackle this incredibly costly issue.”
In addition to NsKnox’s aforementioned data-shredding technique, it offers a solution — TxAuthority — that verifies payments and detects fraud in real time. Thanks to an autonomous subsystem that can block suspicious transactions, it’s able to address a “broad range” of cyberattacks and fraud, Tenzer says, including insider attacks, external scams, social engineering, and data manipulation attempts. Moreover, it integrates with existing financial payments systems, and is delivered as a service on top of NsKnox’s CCS platform.
Cohen says that several “leading” financial institutions have expressed interest in adopting it. Mum’s the word right now on which ones specifically, though.
“We are committed to creating an impenetrable line of defense against corporate payment fraud,” Cohen, who serves as NsKnox’s executive chairman, said. “This financing round is a tremendous milestone, helping us realize our vision of protecting corporate payments with our entirely new Cooperative Cyber Security paradigm. The bad guys are working together — so should the good guys. That’s what nsKnox is all about.”
NsKnox was founded in 2016, and has offices in Tel Aviv and Boston.